Ukraine 101:

• No significant developments.

West’s leverage over Russia:

• No significant developments.

Russia’s leverage over West:

• No significant developments.

Russia’s leverage over Ukraine:

• No significant developments.

Casualties and costs for Russia, West and Ukraine:

• Ukraine on Dec. 29 reported its first combat death since Kiev agreed a new "indefinite" ceasefire deal with pro-Russian insurgents in the separatist east. The insurgents agreed to the truce on Dec. 23—two days after it was negotiated by Ukraine and Russia with the help of mediators from the OSCE. (AFP, 12.29.16)

Red lines and tripwires:

• No significant developments.

Factors and scenarios that could cause resumption of large-scale hostilities or lead to accidents between Western and Russian forces in Europe:

• Russian state media is reporting that the Kremlin has said nearly all communication channels between the U.S. and Russia are frozen. “Almost every level of dialogue with the United States is frozen. We don’t communicate with one another, or we do so minimally,” Kremlin spokesman Dmitry Peskov has said. (Independent, 12.21.16)
• ''They're scared to death of Russia,'' Gen. Raymond T. Thomas, the head of the Pentagon's Special Operations Command said of the tiny militaries of Latvia, Lithuania and Estonia.The three countries increased spending on new defense equipment to $390 million in 2016, from $210 million in 2014. (New York Times, 01.02.17)
• A serious military confrontation between Russia and a NATO member state or a severe crisis in North Korea are among top international concerns for 2017 cited in a new survey of experts conducted by the Council on Foreign Relations. The ninth annual Preventive Priorities Survey identified seven top potential flashpoints for the United States in the year ahead. (CFR, December 2016)

Arming and training of Ukrainian forces by Western countries:

• Millions of dollars' worth of U.S.-supplied Raven drones that Kiev had hoped would help in its war against Russian-backed separatists have proven ineffective against jamming and hacking, Ukrainian officials say. (Reuters, 12.22.16)

Strategies and actions recommended:

• Ukrainian industrialist Viktor Pinchuk: “Ukraine should consider temporarily eliminating European Union membership from our stated goals for the near future. … While we maintain our position that Crimea is part of Ukraine and must be returned, Crimea must not get in the way of a deal that ends the war in the east on an equitable basis. … [W]e may have to overlook this truth and accept local elections.” (Wall Street Journal, 01.03.17)

Analysis:

• During the next 12 months, the U.S. will start easing the sanctions imposed on Russia over the showdown in Ukraine in 2014, according to 55% of respondents in a Bloomberg survey, up from 10% in an October poll. Without the restrictions, Russia’s economic growth would get a boost equivalent to 0.2 percentage point of GDP next year and 0.5 percentage point in 2018, according to the median estimates in the poll. (Bloomberg, 12.20.16)

Other important news:

• Russian President Vladimir Putin said that peace talks sponsored by France and Germany should remain the basis for efforts to settle the conflict in eastern Ukraine. Putin said at a news conference Dec. 23 that the “Normandy format hasn’t been highly effective but there is nothing else, and work in that format should continue or the situation will deteriorate.” (AP, 12.23.16)
• Russia has criticized the Netherlands for allowing the United States to begin stocking tanks there, and for a court ruling that ordered Crimean treasures on loan to a Dutch museum to be returned to Ukraine rather than Russia. (RFE/RL, 12.22.16)
• Russian howitzers and rocket launchers regularly pounded Ukrainian positions across the border in the early stages of the war in eastern Ukraine, according to an analysis of hundreds of attack sites published Dec. 21 by the open-source investigative group, Bellingcat. (AP, 12.21.16)
• Sen. John McCain (R-Ariz.), who has emerged as the chief opponent within the Republican Party to Donald Trump's warming relations with Russian President Vladimir Putin, underscored his tough stance Dec. 31 by spending New Year's Eve at a forward combat outpost with Ukrainian troops. McCain said in Kiev that the United States will not strike a "Faustian bargain" with Putin. Sen. Lindsey Graham (R-S.C.) said Congress would pursue in 2017 more sanctions against Russia, targeting the energy and banking sectors, as well as "Putin and his inner circle." (USA Today, 01.02.17, RFE/RL, 12.30.16)
• The Ukrainian state-run defense concern Ukroboronprom announced a plan to manufacture firearms, such as M16 assault rifles, in Ukraine in accordance with NATO standards jointly with U.S. company Aeroscraft. (Sputnik, 01.03.17)
• Hackers have targeted Ukrainian state institutions about 6,500 times in the past two months, including incidents that showed Russian security services were waging a cyberwar against the country, President Petro Poroshenko has said. (Reuters, 12.29.16)
• The Ukrainian Orthodox Church’s Moscow Patriarchate (UOC-MP) helped arrange a prisoner exchange of two Russian citizens for a Ukrainian serviceman who had spent nearly two years in captivity. (The Moscow Times, 12.22.16)
• The Ukrainian parliament removed lawmaker Nadia Savchenko from the country’s delegation to the Parliamentary Assembly of the Council of Europe on Dec. 22. Savchenko has confirmed media reports that she had met in the Belarusian capital, Minsk, with leaders of two Russia-backed separatist groups in eastern Ukraine. (RFE/RL, 12.22.16)
• Ukraine returned 17 masterpieces valued at 17 million euros to Italy on Dec. 21 after they were stolen by armed robbers from a Verona art museum last year. (RFE/RL, 12.21.16)
• Ukraine's parliament has approved a budget for 2017, raising its chances of securing more aid from the International Monetary Fund under a $17.5 billion loan package. The document, approved by 274 to 226 on Dec. 21, keeps the budget deficit at 3% of GDP, in line with the IMF's guidelines. (RFE/RL, 12.21.16)
• Revenue to Ukraine’s national budget in 2016 totaled Hr 616.219 billion ($22 billion), which was up 15.2% from 2015 and 1.7% less than the target, according to a posting on the website of the State Treasury Service of Ukraine. (Kyiv Post/Interfax-Ukraine, 01.03.17)
• Ukrtransgaz gas transport system operator said that Ukraine's gas transit system handled over 82 billion cubic meters of gas in 2016, and increase of 23% compared to the year before.(Sputnik, 01.03.17)
• Ukraine on Jan. 2 reported a one-third drop in its use of natural gas and general energy savings that will be cheered by its financial backers from the International Monetary Fund. (AFP/Yahoo, 01.03.17)
• Yulia Marushevska, a young activist who became prominent in Ukraine's 2014 uprising and was later appointed to work on a major project to reform the corruption-plagued customs authorities of Odessa, is herself being investigated for corruption; she has denied all wrongdoing and called the head of Ukraine’s Fiscal Service a “guard dog” of corruption. (Reuters, 12.29.16)